Hyundai Group to enter telecom market

Conglomerate mulls joining consortium formed by SME association


Hyundai Group is poised to once again try its hand in the information and communication industry, as the company was found to have decided to participate in a consortium seeking to set up a telecom service provider.

Hyundai is considering investing about 200 billion won ($176.5 million) into a consortium in which Korea Federation of Small and Medium Business has established to become a shareholder at a new entity for competing in the telecom industry.

The government had previously said it would allow another telecom services provider to enter the market, which is currently dominated by SK Telecom, KT Corp. and LG Uplus.

The federation of SMEs had been seeking entry in aims to strengthen its position in the telecom industry, to which so far it had been merely supplying with no significant roles. 

Hyundai Group Chairwoman Hyun Jeong-eun reportedly gave the green light after she met with the federation executives and others connected to the deal to discuss the possibilities of entering the telecom race.

If Hyundai goes ahead with the investment, it will become the second-largest shareholder in the consortium, following the federation itself and about 2,000 member SMEs that will together become the majority shareholder operating a special purpose company.

“The federation hopes to hold at least a 30 percent stake as the biggest stakeholder,” said one federation official. The federation’s investment will be worth about 250 billion won.

The government has yet to announce the final details of the bidding for the market entry, but industry watchers believe the bidding will start late this month or early next month.

The new player can then seek to initiate services at around October next year, those close to the matter said.

This marks Hyundai’s first attempt to get back into the telecom industry after one of its former affiliates, Hyundai Electronics, ceased to manufacture mobile phones in the 1990s.

Industry watchers have said the entry of a player such as Hyundai with already an established status in the local corporate sector could impact the other rivals, which may have to fight against cheaper prices offered by the late-comer.

“We are watching the situation, but we can’t say yet to how Hyundai’s participation will change the scenery, especially since the company has not confirmed the decision,” said one executive at an existing telecom company.

Hyundai Group officials said the decision has not been finalized, but they also did not deny that they were considering the participation in the consortium.

By Kim Ji-hyun (jemmie@heraldcorp.com)